Abstract
This article addresses the generic dynamic decision problem of how to achieve sustained market growth by increasing two interdependent organizational resources needed (1) to increase and (2) to sustain demand. The speed and costs of increasing each resource are different. Failure to account for this difference leads to policies that drive a quick increase of demand followed by decline. Three generic policies derived from the literature have been implemented in a system dynamics model. Simulation shows that they all can generate sustained exponential growth but differ in performance: even policies criticized in the literature for provoking overshoot and collapse can drive sustained growth. This leads to questions for further research regarding (1) the set of generic policies and its structure and (2) concerning the reasoning of human decision-makers when choosing between such policies and the salience of important but easily overlooked features of the decision situation.
Highlights
This article proposes a theoretical examination of generic policies for a dynamical problem faced by decision-makers in growth-oriented organizations: achieve and sustain growth through the development of necessary and interdependent organizational resources
This article has examined a dynamic problem requiring decision-makers to achieve sustained market growth by increasing two interdependent organizational resources that react with different speeds
The simulations discussed in this article show that all three policies can in principle take the difference in speed of reaction into account: changes to one resource lay stress on the other resource, and this stress can be used to decide how much effort to put in changing the other resource
Summary
This article proposes a theoretical examination of generic policies for a dynamical problem faced by decision-makers in growth-oriented organizations: achieve and sustain growth through the development of necessary and interdependent organizational resources. The relationship between resources and the production of goods to satisfy needs and wants is a fundamental part of economic thought. In management and business administration, the relationship between resources and the strategic development of firms is inquired by the so-called resource-based view [1,2,3,4,5,6]. An essential idea in the resource-based view is that an organization’s performance depends on the availability of resources—material or immaterial—required for processes. Managers must make sure that sufficient resources are available [7]. For growth-oriented organizations, this implies the need to develop such resources in the future [2,8,9,10]: the stock of these resources must increase over time
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